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Exercise: (Binomial and Continuous Model.) Consider a binomial model of a risky asset with the parameters r = 0:06, u = 0:059, d =  0:0562, S0 = 100, T = 1, 4t = 1=12. Note that u

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Weighted Arithmetic Mean Another aspect to be considered is the importance we assign to each observation. The arithmetic mean as we calculated it so far gives equal

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